COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 70748 OHIO STATE UNDERWRITERS, INC., : : Plaintiff-Appellant : : JOURNAL ENTRY vs. : and : OPINION HOMESTEAD INSURANCE COMPANY, : : Defendant-Appellee : DATE OF ANNOUNCEMENT OF DECISION : JANUARY 23, 1997 CHARACTER OF PROCEEDING : Civil appeal from : Common Pleas Court : Case No. 267005 JUDGMENT : REVERSED AND REMANDED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiff-appellant John M. Manos Joseph R. Giancola MANOS, PAPPAS & STEFANSKI CO., L.P.A. 34950 Chardon Road, No. 206 Willoughby Hills, Ohio 44094 For defendant-appellee: Thomas Kaiser GALLAGHER, SHARP, FULTON & NORMAN 1501 Euclid Avenue, 7th Floor Cleveland, Ohio 44115 -2- NAHRA, P.J.: Appellant, Ohio State Underwriters, Inc. ("OSU"), appeals the trial court's order vacating an arbitration award and granting summary judgment to appellee, Homestead Insurance Co. ("HIC"). For the following reasons, we reverse the order granting summary judgment and vacating the third arbitration award. We also remand this cause for further proceedings. OSU administers extended service contracts and warranties on new and used vehicles sold throughout Cuyahoga County. OSU and HIC entered a Service Contract Reserve Indemnity Policy pursuant to which HIC insured OSU for all costs incurred under the extended service contracts and warranties. Thereafter, on October 19, 1991, OSU and Corinthian Management Inc., a subsidiary of HIC, entered an agreement (the "Agreement"). Among other provisions, the Agreement established Claims Reimbursement Trust funds and obligated OSU to deposit sums of money into the trust funds for the purpose of reimbursing dealer claims arising out of the service contracts. The Agreement entitled OSU to disbursement of underwriting profit and investment income resident in the trust funds. However, paragraph 15 of the Agreement conditioned OSU's right to these disbursements. Paragraph 15 states in pertinent part: 15. Should the Claim Reimbursement Trust funds held by the Trustee for any particular program (e.g., 1 year, 2 years, 3 years, etc.) for any given calendar month period be deemed by the Trustee or the Insurance Carrier to be insufficient to pay all claims submitted and all claims estimated by the Trustee or the Insurance Carrier to be submitted in the future by the holders of any valid -3- Service Contracts * * * additional Claim Reimbursement Trust amounts for those Service Contracts shall be obtained by the Trustee retaining monies due OSU pursuant to Paragraphs 11 and 12 and transferring Claim Reimbursement Trust funds from any other programs * * *. In 1992, HIC invoked paragraph 15 of the Agreement to deny payment of certain trust proceeds to OSU. Appellant claimed that HIC could not deny payment. Pursuant to the Agreement's arbitration clause, the parties submitted the issue to arbitration. The arbitration panel returned a decision in favor of OSU and directed HIC to distribute an unspecified amount of money. HIC refused to distribute any funds. The parties submitted the matter to arbitration a second time in order to determine the amount of the required disbursement. On February 16, 1994, the panel issued a second award establishing a formula for determining the distribution. Based on this formula, the panel concluded that HIC unreasonably withheld distribution of $102,191.02. Pursuant to the arbitration award, the trustee distributed this sum to OSU. The panel also ordered future payments according to its formula. On March 3, 1994, HIC petitioned the panel to reconsider its second ruling pursuant to paragraph 13 of the award, which permitted HIC to apply to the panel for relief should the devised formula jeopardize the integrity of the trust fund. The panel declined to reconsider its ruling. In response, HIC allegedly attempted to remove the trust fund to New York. OSU filed an action against HIC requesting injunctive relief, seeking a judgment enforcing the arbitration awards, and -4- asserting a "bad faith" tort claim against HIC. Upon motion and pursuant to R.C. 2711.10(D), the trial court vacated the second award and remanded the case to arbitration. The panel issued a third award. The award was substantially identical to the second award. Thereafter, the trial court vacated the third arbitration award. Further, the trial court granted summary judgment to HIC on all claims. OSU timely appealed. Appellant asserts two assignments of error on appeal. I. We begin with appellant's second assignment of error which states: THE TRIAL COURT ERRED IN VACATING THE SECOND AND THIRD ARBITRATION AWARDS ON THE BASIS THAT THE ARBITRATORS EXCEEDED THE SCOPE OF THEIR INSTRUCTIONS IN FAILING TO RENDER A FINAL JUDGMENT AND IN FASHIONING A REMEDY FOR DISTRIBUTIONS CONTRARY TO THE AGREEMENT. Paragraph 29(a) of the Agreement provides in pertinent part: All controversies arising under, or in connection with, this Agreement shall be determined [in federal court]. In the event both parties agree, any such controversy may be settled by binding arbitration at a location agreed upon by both parties and in accordance with the rules of the American Arbitration Association * * *. Under this provision, the parties extensively arbitrated this dispute only to have the trial court vacate the arbitration awards. The trial court based its order vacating the third award on R.C. 2711.10(D) which states: -5- [T]he court of common pleas shall make an order vacating the award upon the application of any party to the arbitration if: (D) The arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. Thus, the issue is whether the trial court correctly concluded that the arbitrators exceeded or imperfectly executed their powers. While some question exists as to the proper standard of review in this case, Motor Wheel Corp. v. Goodyear Tire & Rubber Co. (1994), 98 Ohio App.3d 45, 52, we conclude that under either standard the trial court erred by vacating the third arbitration award. This court noted in Cleveland v. Fraternal Order of Police, Lodge No. 8 (1991), 76 Ohio App.3d 755, 758, 603 N.E.2d 351, that "an arbitrator's award is presumed valid." In Cleveland, supra, we stated at 758: When parties agree to submit their dispute to binding arbitration, they agree to accept the result, regardless of its legal or factual accuracy. * * * To determine if the arbitrator exceeded his power, the trial court must first determine whether the arbitrator's award draws its essence from the [agreement] of the parties. This is established where there is a rational nexus between the agreement and the award, and where the award is not arbitrary, capricious or unlawful. So long as the arbitrator is arguably construing the contract, the trial court is obliged to affirm his decision. This is so because it is the arbitrator's determination for which the parties bargained. [Internal quotations and citations omitted.] -6- Appellee contends that the arbitrators exceeded their powers under the Agreement by devising a formula and directing HIC to make future distributions based upon the formula. The Ohio Supreme Court, in Queen City Lodge No. 69, Fraternal Order of Police v. City of Cincinnati (1992), 63 Ohio St.3d 403, 588 N.E.2d 802, stated, at 63 Ohio St.3d 406: Authorities uniformly agree that the power to award a remedy is generally part and parcel of the arbitration process. * * * We agree * * * that the arbitrator's power to award a remedy is presumed unless the parties agree otherwise. The court continued and stated that "[a]n arbitrator has broad authority to fashion a remedy, even if the remedy contemplated is not explicitly mentioned in the [agreement]." Id. at 407. Clearly, the third arbitration award was proper. The parties bargained for the right to proceed to binding arbitration on "any issue arising under, or in connection with" the Agreement. The panel decided that under the Agreement, HIC could not unreasonably prevent distribution of trust fund sums. The panel reduced the nebulous standard of reasonableness to a precise formula. Finally, the panel required HIC to act within the bounds of the Agreement in the future. Simply, the panel did little more than interpret the Agreement, enforce its interpretation, and impose a continuing duty to abide by its interpretation of the Agreement. While HIC may not agree with the panel's interpretation, the award is binding. Accordingly, the trial court committed error when it vacated the third arbitration award. We sustain appellant's second assignment of error. -7- II. Appellant's first assignment of error states: THE TRIAL COURT ERRED IN GRANTING HIC'S MOTION FOR SUMMARY JUDGMENT. First, in light of our holding with respect to appellant's second assignment of error, the grant of summary judgment was improper on the issue submitted to arbitration. The third arbitration award states at paragraph 14: The Award is in full settlement of all claims and counterclaims submitted to this arbitration. The arbitration award precludes any judicial review except as authorized by statute. See Huffman v. Valletto (1984), 15 Ohio App.3d 61, 63; Charles Fazio & Assoc. Inc. v. Miesen (April 25, 1996), Cuyahoga App. No. 68596, unreported. The trial court also granted summary judgment to HIC on both appellant's request for injunctive relief and bad faith claim. As conceded by the parties during oral argument, these matters were not before the arbitration panel. Thus, each claim was properly considered by the trial court after the third arbitration award. We conclude that the grant of summary judgment was improper on these two claims. It is clear that the party moving pursuant to Civ.R. 56 bears the initial burden of "informing the trial court of the basis for the motion, and identifying those portions of the record before the trial court which demonstrate the absence of a genuine issue on a material [fact]." Dresher v. Burt (1996), 75 Ohio St.3d 280, 292. On motion for summary judgment, HIC failed entirely to address either appellant's bad faith claim or request -8- for injunctive relief. Rather, HIC addressed only those matters previously decided in arbitration. Appellee failed to sustain its initial burden on the remaining claims, and consequently, the grant of summary judgment was improper. Accordingly, we sustain appellant's first assignment of error. Judgment reversed and remanded to reduce the third arbitration award to judgment and for further proceedings on appellant's bad faith claim and request for injunctive relief. -9- This cause is reversed and remanded for proceedings consistent with this opinion. It is, therefore, considered that said appellant recover of said appellee its costs herein. It is ordered that a special mandate be sent to said court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. KARPINSKI, J., and PATTON, J., CONCUR. JOSEPH J. NAHRA PRESIDING JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .